The private sector's participation in delivering surface transportation infrastructure can be viewed as a continuum, ranging from project delivery techniques (e.g., design-build contracting) to project maintenance (extended warranties) and long-term responsibility for financing and managing the operation of facilities (concession agreements). For long-term management contracts, private-sector participation typically takes the form of a lease rather than an outright sale. The state or local project sponsor enters into a multi-year agreement through which the private-sector partner obtains an exclusive concession to operate the facility pursuant to negotiated terms. The operator/investor (concessionaire) receives compensation either by obtaining the right to collect user charges or by receiving annual payments from the government entity that are funded through tax resources or, in some cases, a combination of taxes and user charges imposed directly by the government.
Concession arrangements fall into two broad categories or models: contracts primarily for the development of new assets or the expansion of the capacity of existing assets (commonly referred to as "greenfield" projects) and leases of existing assets (often termed "asset monetizations," "asset securitizations," or "brownfield" projects). For new capacity projects, the public sector's primary motivation is often accelerating delivery of a critical transportation project that has the potential to be self-financed at least in part through direct user fees or supported by specifically dedicated conventional revenues. For asset monetization projects that have their own revenue streams, such as toll facilities, often the governmental owner's primary motivation is to secure an upfront payment that can be used for other purposes. The government is seeking to "monetize" the future stream of net toll or other revenues into an initial large cash payment. In both concession models, private-sector partners are generally chosen through a competitive procurement process.